“I think the most important thing when it comes to declining home values is number one, preventing further foreclosures. That just erodes home values across the board.”

– President-elect Barack Obama comments on the importance of preventing the recent surge of foreclosure situations from rising any further across the nation in a recent Associated Press article. The incoming administration, which takes charge January 19, is considering whether or not to direct “some of the remaining bailout money to foreclosure prevention.” There is currently about $350 billion remaining of the $700 billion that was earmarked back in late 2008 to revive the economy and inflate the credit market. The current plan on the table would provide lenders with incentives to modify loans that are either already in default or headed in that direction. It is estimated that the plan could prevent 1.5 million foreclosures.

It has been a rough year for real estate to say the least — home prices are down across the board and foreclosures are beginning to increase significantly because of the volatile United States economy.

The good news is that certain areas throughout the nation are weathering the storm quite well. In fact, a recent Kiplinger.com report indicates that “damage has been minimal — if nonexistent — in certain pockets across the country.”

Six cities, in particular, were highlighted in the study:

• Lancaster, Penn.
• Clarksville, Tenn.
• Albuquerque, N.M.
• Burlington, Vermont
• Pittsburgh, Penn.
• Johnson City, Tenn.

Fiserv Lending Solutions — a home-price research company — was the source for the data. It indicated that these areas experienced slow and steady growth, as well as kept unemployment and foreclosure rates below average.

Of course, this is just a sample list — there are likely numerous other cities, towns and regions that are not feeling the pinch as much as the rest. And over time that list will grow as things begin to turnaround and return to normal.

Let’s just hope that happens sooner rather than later.

More than 7.5 million American people — almost 15 percent of homeowners nationwide with mortgages — spent half their incomes or more on housing costs in 2007, according an Associated Press report that examined data just released by the U.S. Census Bureau.

In addition, about 19 million homeowners — nearly 40 percent of homeowners throughout the nation — are now considered “financially burdened,” spending at least 30 percent of their incomes on housing.

That’s bad news for countless families located across the United States who are finding it harder and harder to make ends meet.

Of course, hindsight is 20/20. And if mortgages were issued correctly perhaps it could have helped minimize the recent affects of the housing downturn on both sides of the deals (lenders and borrowers).

To do that, lenders and buyers across the board should have followed a safer debt-to-income ratio standard that historically hovers around 28 percent.

Here’s how that looks:

• Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income

$3,750 Monthly Income x .28 = $1,050 allowed for housing expense

$3,750 Monthly Income x .36 = $1,350 allowed for housing expense plus recurring debt

Clearly, this is not the only reason behind the current economic mess, but it is certainly a contributing factor. Mix in balloon mortgages, rising debt, unemployment, fuel prices and several other ingredients and we can see the reason foreclosures are occurring and the economy is struggling.

For information on how to avoid and/or stop foreclosure click here.

The Foreclosure Prevention Act of 2008 today inched closer to becoming a reality when the U.S. Senate agreed with a majority vote (84-12) to move forward with the legislation that could free hundreds of thousands of distressed homeowners from the clutches of foreclosure.

The bill (H.R. 3221) will now move to a House-Senate conference committee to resolve differences between the two chambers and possibly face several potential amendments.

It’s legislation that is designed to alleviate the wave of failing loans nationwide and help bolster a real estate market that has been in a nose dive for months.

Here is a rundown of the bill’s benefits courtesy of Senator Lamar Alexander (R-Tenn.) who voted in its favor:

• A refundable tax credit of up to $8,000 for first-time homebuyers.
• Establishes a new, temporary FHA program (HOPE for Homeowners) to help homeowners who are at risk of losing their homes to refinance their mortgages, if their lenders voluntarily agree to participate in the program.
• The program will be paid for using fees paid by Fannie Mae and Freddie Mac –- not taxpayer dollars.
• Only certain owner-occupants would be eligible to refinance –- no investors or investor properties will qualify.
• Creates a tough, new regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks to reduce the possibility of an expensive taxpayer bailout someday.
• Sets minimum standards for mortgage brokers and strengthens the “Truth in Lending Act” (to require better disclosure to borrowers before they sign a mortgage).
• Provides mortgage protections for servicemembers and veterans, such as lengthening the time a lender must wait before staring foreclosure proceedings from three months to nine months after a soldier returns from service.
• A standard property tax deduction for taxpayers who don’t itemize on their returns.
• More than $10 billion in additional bond authority that states could use to provide loans to first-time homebuyers or to finance the construction of affordable rental housing.
• An additional $150 million for foreclosure prevention counseling.

President George W. Bush has in the past threatened to veto the legislation if it makes it to his desk for signature, which is required for the Foreclosure Prevention Act to become law.

However, this is an election year and there is pressure on him and his supporters to allay some housing-related fear among the general public.

This bill could possibly do just that … and then some.

Rep. Laura Richardson (D-Long Beach) of Sacramento, Calif., defaulted on her mortgage payments and her South Bay home was sold in a recent foreclosure auction, according to the Daily Breeze.

It’s actually the third property of hers to fall behind on bank payments — Richardson is also in jeopardy of losing real estate in Long Beach and San Pedro. She seems to have saved the Long Beach home from foreclosure; however the San Pedro residence is eight months past due and an auction date is already scheduled.

In addition to the various mortgage defaults, Richardson also failed to make almost $9,000 in payments for real estate taxes.

Here’s what she had to say about the mess:

“I should have moved forward in an earlier fashion. I acknowledge that. I intend never to conduct business in that fashion again…. I have financial obligations, and I will fulfill those financial obligations. – There will be no debts to the state of California…. I am not financially wealthy. I am not a millionaire. – Based upon what I was going through, changing four jobs in less than one year, I think any American would understand what that does in terms of a person’s financial stability.”

According to the report, Richardson makes an annual salary of $169,300 as a member of Congress. And as a member of the Assembly, she earned about $116,000 in addition to a per diem for living expenses in Sacramento.